#llc
LLC formation, taxation, and accounting best practices explained
Section 199A is now permanent under OBBBA. Pass-through owners get a 20% deduction, wider SSTB phase-in ranges ($75K single / $150K joint above the 2026 threshold), a new $400 minimum for material participants, and the same W-2 wage and UBIA tests at the top of the band.
Reg. 1.469-2(f)(6) recharacterizes net rental income from property you rent to your own active business as nonpassive while leaving rental losses passive. This guide explains the asymmetry, walks through a dentist example with a $200,000 cost segregation deduction, and shows how the Reg. 1.469-4 grouping election can collapse the rule.
A practical walkthrough of the Section 368(a)(1)(F) reorganization — the six regulatory requirements, the six-step Rev. Rul. 2008-18 choreography, why PE buyers prefer it to a 338(h)(10) election, and how it preserves the operating EIN while giving the buyer asset-basis step-up and the seller tax-deferred rollover equity.
An F reorganization under IRC Section 368(a)(1)(F) lets an S corporation restructure tax-free into a holding-company/QSub form so a buyer gets an asset basis step-up at any ownership percentage and sellers can defer tax on rollover equity.
Owner's equity is Assets minus Liabilities — the running total of contributions, draws, profit, and losses. This guide structures equity accounts for sole proprietors, partnerships, and LLCs, explains why draws are not expenses, and shows the year-end closing entries that keep a balance sheet in balance.
A disguised sale under Section 707(a)(2)(B) collapses a partnership contribution and a related cash distribution into a taxable sale. Transfers within two years are presumed a sale; the deemed-sale fraction equals consideration received divided by property FMV.
Section 707(a)(2)(B) recharacterizes paired property contributions and cash distributions to LLC members as taxable sales when they occur within two years. A walkthrough of the two-prong test, the rebuttable two-year presumption, the four regulatory exceptions, debt-financed distribution mechanics, and the Form 8275 disclosure that keeps partners out of audit trouble.
Texas raised the franchise tax no-tax-due threshold to $2.65 million for 2026 and 2027 reports, but LLCs and corporations still owe a Public Information Report by May 15. Missing it triggers forfeiture, personal liability for officers, and loss of access to Texas courts.
Form 8858 reports foreign disregarded entities and foreign branches on a U.S. return, and missing one carries a $10,000 penalty per entity per year that can snowball to $50,000 after IRS notice. This guide covers who must file, Schedules C through M, Section 987 currency calculations, the Schedule K-2/K-3 box 11 connection for Category 6 filers, and the four paths back into compliance.
Section 1446(f) requires buyers of partnership interests to withhold 10% of the amount realized when a foreign partner sells and remit it to the IRS within 20 days on Form 8288. This guide walks through the six exceptions, the certifications that must be in hand before closing, and the bookkeeping records that defend the position under audit.
Section 195 and Section 248 let founders deduct the first $5,000 of startup costs and the first $5,000 of organizational costs in year one, with the remainder amortized over 180 months. A guide to the $50,000 phase-out, the deemed election, and the mistakes that forfeit the deduction for LLCs, partnerships, and corporations.
When a partner sells an LLC or partnership interest, Section 751 can recharacterize a large share of the gain as ordinary income taxed up to 37 percent. Form 8308 is the partnership's required disclosure of that hot-asset gain on Form 1065, with a January 31 furnishing leg and a return-due-date filing leg in 2026.
